Court Tosses $50K Award Against Engine Maker

(CN) – A federal judge erred in ordering a boat-engine maker to pay more than $50,000 for breach of warranty after the company was dismissed from the case, the 6th Circuit ruled. The judge had reinstated the claim after Cobra Power’s president made statements at trial that apparently contradicted the company’s grounds for pretrial dismissal.

The underlying case involved a seven-year dispute between boat buyer Tina Dillon, Cobra and the Lake Cumberland Marine dealership. Dillon said she received the wrong engines for her high-performance speed boat, and those engines repeatedly malfunctioned and required significant repairs. During pretrial proceedings in 2003, the district court dismissed Dillon’s breach of warranty claim against Cobra. But in 2004, after a two-day bench trial on the dispute between Dillon and Cumberland, U.S. District Judge Karen Caldwell reinstated the warranty claim and entered a $50,400 judgment against Cobra. The reversal was based on testimony from Cobra’s president, Randy Garcia, who said his company had been prepared to honor a six-month warranty. That statement at trial apparently contradicted Cobra’s earlier position that it never offered Dillon a warranty. The company’s attorney was not present at trial. Cobra argued that the unexpected reversal violated due process, and the Cincinnati-based federal appeals court agreed. “[I]t was not appropriate for the district court to consider evidence produced at trial in re-adjudicating the pretrial summary judgment motion that it granted in favor of Cobra,” wrote U.S. District Judge Jack Zouhary, who was sitting by designation on the three-judge appellate panel. The court also ruled that the lower court should not have let Dillon amend her complaint after the trial to allege conversion against Cobra, but that it correctly refused to allow new allegations for violations of the Kentucky Consumer Protection Act. Finally, the 6th Circuit overturned the damage award against Cobra and reluctantly remanded, given the “already lengthy history of this lawsuit.”